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Contracts Outline (Fall 2008)
Enforcing Contracts: Consideration.......................................................................................................................................................2Enforcing Contracts: Adequacy of Consideration...................................................................................................................................3Enforcing Contracts: Preexisting Duty...................................................................................................................................................4Enforcing Contracts: Mutuality of Obligation........................................................................................................................................5Enforcing Contracts: Quasi Contract-Restitution...................................................................................................................................6Enforcing Contracts: Promissory Estoppel (Reliance)............................................................................................................................7Enforcing Contracts: Statute of Frauds...................................................................................................................................................8Making a Contract: The Objective Test..................................................................................................................................................9Making a Contract: Offers (Definiteness).............................................................................................................................................10Making a Contract: Acceptance............................................................................................................................................................11Making a Contract: Acceptance By Performance.................................................................................................................................12Making a Contract: Acceptance by Silence..........................................................................................................................................13Making a Contract: Counter Offer ........................................................................................................................................................14Making a Contract: U.C.C. 2-207.........................................................................................................................................................15Making a Contract: Shrink Wrap Terms (2-207)..................................................................................................................................16Making a Contract: Terminating Offer .................................................................................................................................................17Making a Contract: Irrevocable Offer ...................................................................................................................................................18Avoidance of Contracts: Defective Formulation of Agreement............................................................................................................19Avoidance of Contracts: Indefiniteness................................................................................................................................................20Avoidance of Contracts: Capacity to Contract......................................................................................................................................21Avoidance of Contracts: Mistakes........................................................................................................................................................22Avoidance of Contracts: Fraud/Misrepresentation................................................................................................................................23Avoidance of Contracts: Duty to Disclose............................................................................................................................................24Avoidance of Contracts: Duress...........................................................................................................................................................25Avoidance of Contracts: Unconscionability.........................................................................................................................................26Avoidance of Contracts: Illegality........................................................................................................................................................27Avoidance of Contracts: Public Policy.................................................................................................................................................28Performance: Parol Evidence Rule.......................................................................................................................................................29Performance: Interpretation..................................................................................................................................................................30Performance: Good Faith Requirement................................................................................................................................................31Performance: Good Faith Requirement (cont.).....................................................................................................................................32Performance: Warranties......................................................................................................................................................................33Performance: Conditions/Waivers........................................................................................................................................................34Performance: Constructive Condition of Exchange (Substantial Performance)....................................................................................35Performance: Impracticability and Frustration of Purpose...................................................................................................................36Damages: Types of Remedies...............................................................................................................................................................37Damages: Payor Breach.......................................................................................................................................................................38Damages: Performer Breach/Putative & Emotional Damages..............................................................................................................39Damages: Equitable Relief ...................................................................................................................................................................40Damages: Liquidated Damage Clauses................................................................................................................................................41
TLS Notes
: This was my second outline, and is a bit longer than most of my outlines; on the table of contents if you press CNTRL and click the page number, it takes you to that page. This is what I describe asa more "thematic" outline.[1]
 
Enforcing Contracts: Consideration
Restatement § 71
•
(1) “To constitute consideration, a performance or a return promise must be bargained for 
•
(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promiseand is given by the promisee in exchange for that promise
•
(3) The performance may consist of 
○
(a) an act other than a promise, or 
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(b) a forbearance, or 
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(c) the creation, modification, or destruction of a legal relation”
•
(4) can be a third party
Conditional Gift
- A promise without consideration is a mere conditional gift; not enforceable by the courts. A goodfeeling is not consideration. [FORK: Bargained for exchange or conditional gift]* Test of whether it is conditional gift is if both parties could sue for breach.
Binding Gift Promises
- Most courts will not recognize binding gift promises even if supported by seal. UCC 2-203"every effect of the seal which relates to sealed instruments" as such is wiped out insofar as contracts for sale areconcerned."
○
Exceptions; some places recognize notary seal because of method of signing. Trusts are also ways tomake binding gift promises.
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UCC 1-107- a right that comes out of breach can be waived without consideration
○
UCC 2-205- merchant firm offer; "an offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open for certain time isn't revocable"
Kirksey v. Kirksey
(Conditional Gift / Brother in Law Promises house)
•
Brother-in-law wrote to recently widowed sister-in-law, invites her to move onto his property, she sells her house and moves there. Then he made her leave.
•
Court finds
no consideration
; not enforceable. Good feeling is not consideration.
Benefit/Detriment Model
- consideration can consist of either consist of a benefit accrued to one party or a legaldetriment to another party.
Hamer v. Sidway
(Promise to pay $5,000 if nephew gives up smoking)
•
Consideration exists; court applies benefit-detriment model; consideration may consist of "a benefit accruing toone party or a detriment to another party." This includes limiting own legal freedom.
•
It is not the court's job to ask whether the thing which forms consideration is actually a benefit to the promisee.It is enough that the action of consideration is performed.
Bargained For Requirement
- Courts set low hurdle for bargaining; does not require haggling, rather it just meanswhether there is some reasoning behind what is being bargained for. Must be intended to induce action,
 Jara
. [FORK:Bargained for exchange or conditional gift]
Langer v. Superior Steel Corp.
(Receives pension if he forgoes opportunity to work for another company)
•
Enforceable on basis of consideration; induced former worker to not work for another company (this is a benefit)
•
Also could be enforced on basis of promissory estoppel
Jara v. Suprema Meats, Inc.
(Helps son get a line of credit; son gives a promise back to not get raise)
•
To be valid consideration, contracts must be bargained for which is indicated by the phrase "as an inducement to the promisor."
•
In this case, Jara Sr. was not an inducement to change; he helped provide the credit before and then was given anunrelated promise.
 
•
Adequacy of Consideration -must be something of value in consideration; altruism is not enough of a consideration,there needs to be something going both ways and it must be bargained for.
[2]
 
Enforcing Contracts: Adequacy of Consideration
Restatement § 79. Adequacy of Consideration; Mutuality of Obligation.
If consideration requirement is met, there is no additional requirement of (a) a gain to the promisor or a loss tothe promisee; (b) equivalence in the values exchanged; or (c) “mutuality of obligation”.
Restatement §81. Consideration as a Motive or Inducing Case. (1)
The fact that what is bargained for doesnot itself induce the making of a promise does not prevent it from being consideration.
(2)
Fact that a promisedoes not itself induce a performance or return promise does not prevent the performance or return promise from being consideration for the promise.
•
Comment a.
“Bargained for.” : In most commercial bargains, the consideration is the object of the promisor’s desire and that desire is a material motive or cause inducing the making of the promise.BUT:
•
Comment b.
Immateriality of motive or cause:
unless both parties know that the purported consideration is mere pretense, it doesn’t matter if promisor’s desire for the consideration is incidental to other objectives
and even that the other party knows this to be so.
Mixed Motives
- Even if other motives are present and real reason for exchange, it is irrelevant so long asother consideration exists. Both parties must know that the purported consideration is immaterial (seerestatement clause above).
Thomas v. Thomas
(Widow is given house if she maintains upkeep and pays small fee of rent each year)
•
Rent & Upkeep are not nominal consideration; money indicates it is not voluntary conveyance.
•
If governed by restatement, both sides would not it was pretense.
•
Although real reason for contract may have been honoring wishes; consideration was still present andulterior motive for contract is irrelevant.* Intention to make contract is irrelevant; cannot create a contract by simple desire to contract withoutconsideration.
In re Greene
(Person having an affair promises lots of money in exchange for several nominal items)
•
Seal is not binding consideration; $1.00 is nominal (both sides knew it was pretext)
•
"Phrase good and valuable consideration" is not actual duty; too vague.
•
Intention to make a contract is irrelevant if lacking consideration; won't force gift promises.
Fiege v. Boehm
(Contract to forgo bastardy hearings in exchange for child support and other items)
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Promise to forgo lawsuit (even if lawsuit would have failed) is sufficient consideration so long as promise ismade in good faith. Promises to forgo lawsuits not in good faith are not valid consideration.
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Dispute in various courts and in restatement over whether good faith alone is sufficient or if there must besome factual basis for the claim.
[3]
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